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Ocean Minded adds shoes, pushes inland

I stopped by Ocean Minded recently to see what they have planned for 2009 and find out how their world has changed since Crocs acquired the brand nearly two years ago.

The acquisition: Founder Gary Ward told me the financial backing of Crocs has helped the small sandal and footwear company in several ways.

Ocean Minded, which Crocs acquired for $1.75 million plus a potential $3.75 million earn out, now has the financial power to manufacture extra inventory to satisfy in-season demand, and fulfill large orders from big retailers such as PacSun.

Crocs' network of international distributors has also allowed Ocean Minded to expand globally. Ocean Minded is in 45 of the 90 countries Crocs sells in, with a substantial business in 10 countries.

After essentially running the business himself for 11 years, Gary now has a team to help him, including General Manager Andy Palmer, Marketing Director Bob Tanner, and in-house graphics and design staff.

"I used to do it all myself," Gary said. "I'd go to China, go in the sample room, and design. ... It's nice to have this team behind me that cares about the business every day as much as I do."

Interestingly, Crocs factories do not make Ocean Minded sandals, which have more handmade elements. The same factories that have made the sandals are still making them, Gary said.

I asked if Crocs recent struggles and low stock price has impacted Ocean Minded at all.

"It's had no impact," Andy said. "It doesn't impact our cash flow."

Andy said everyone in the industry is afraid that when a big corporation from the outside makes an acquisition, the acquired company will no longer be authentic.

"Look around," Andy said. "Do you see corporate America? It's the same guys that were here 24 months ago. We have complete creative control. And now we've been given the resources to be successful in the industry we operate in."

There's another benefit of the acquisition that Gary finds rewarding. The beach cleanups he has championed and organized for 11 years have spread around the world as international distributions take on the cleanup projects in different countries. Here's a picture of a recent Ocean Minded beach cleanup in China.

Economy: Because of the tough economy, Ocean Minded vendors have tightened their prebooks and are asking for more terms. Gary said the company wants to partner with retailers as much as possible and weather the storm together.

"As long as we are fiscally responsible and communicate with retail stores. ... it will be tough the next few years, but we will get through it," Andy said.

Because vendors are more cautious about preorders, Ocean Minded is taking on the risk of building additional inventory.

They are manufacturing and investing in the "A" styles, and buying materials but not yet manufacturing the "B" styles, which will cut down the lead-time to manufacture by 30 days if demand arises.

Andy declined to provide annual revenue figures for Ocean Minded. He also would not say specifically how much the company expects to grow next year, but did say they are forecasting "significant growth," in 2009.

"It's not a number most are pulling down in a recession," Andy said.

Product: For back-to-school next year, Ocean Minded will introduce closed-toe shoes, which it rolled out to a few stores several months ago to test. The shoes, made with recycled materials and with a surf vibe, have had good sell throughs, including a test order at Journeys.

"We're staying true to what is Ocean Minded," Gary said. "We are not chasing skate."

The goal with the shoes is to round out business in the third and fourth quarters, Gary said. Marketing Director Bob Tanner said they've had great sell through.

Ocean Minded has also expanded its T-shirt line, which pushes the environmental message rather than the brand. The T's are sold in stores such as Hobie, Jack's and Swell.com, and PacSun is testing five styles.

Two other products Ocean Minded is excited about include signature sandals from Bede Durbidge and Bethany Hamilton.

Other plans: In the next three years, Ocean Minded plans to push inland and is hiring reps for Michigan, Arizona, New Mexico, Utah and Colorado.

This month, Ocean Minded moves into a new 6,500-square-foot office in San Clemente off El Camino Real with ocean views and freeway signage.

"As a brand, we are well positioned for success, we're in a strong place" Andy said. "Will it be easy? No. ... But even in a recession, people want to spend money. Can they buy a T-shirt, sunglasses or sandals? Yes."